manus: good morning from dubai. these are today's top stories. mayday. the u.k. prime minister rolls the dice on a final brexit gamble, but is facing pressure to abandon it altogether and quit. raises gainsyuan as the trump administration continues black -- considers blacklisting chinese surveillance groups. in a good place. the st. louis fed president tells bloomberg it is premature to talk about a rate cut. are -- concerned that we

we may have slightly over done it with our december rate hike. manus: let's have a look at the dollar. where do you want to be as trade angst rises and china goes into more storm waters? the dollar is higher as we wait for the fomc minutes despite the fact bullard says -- and rosengrant favors patients. take your mind back to data -- dapo. -- back to davos. are we going to see more jawboning of the dollar? marketswhere the oil

have angst. nymex crew down 1%. the world is moving on a low growth track. the biggest drop in almost a week. rosengrant says the report will bring his consciousness. iron ore never far from the conversation. will it make $100? overbought on some of the indices. it is all about exploits from brazil. good morning. any bign the absence of trade headlines, we have heard about the u.s. headline on the possibility of constricting chinese firms, but we have gains in the s&p 500 yesterday. we are drifting on the pound at the moment. yesterday we saw the pound jump before giving up its gains after we heard theresa may would offer parliament a vote on a second referendum. all in the name of trying to get a deal through for the fifth time. fromuickly faced backlash

the dup. questions over where we go from here and how long her position is tenable. 12715 on the pound. the 10 year yield has edged higher. now we are down a basis point. a rate cut would be premature. that is something to keep an eye on. we have recently hit january 2018 lows on 10 year yields. jp morgan, its weekly survey showing traders at their most bullish since mid-2016. we remember what happened. those yields certainly moved higher. juliette saly in singapore has more. good to see you. we are drifting a lot of the asian benchmarks as well. yes, but holding up ok given the latest headlines we had well china was on the lunch break. the u.s. is weighing this blacklisting of up to five chinese surveillance firms.

we have seen the offshore yuan erase earlier gains. the csi 300 is pretty flat. hong kong holding up quite well. a slight gain on the nikkei. also worth watching indian stocks ahead of the outcome of the election, up by 0.4%. the asx 200 is one to watch as well. it has been 11 year highs. atll holding on on the close 6505 points. above that level. let's have a look at stocks because it is about these -- the digital technology is under surveillance following -- the trump administration to curtail this giant. the videogame maker has fallen more substantially than that, but off 6% in the afternoon session. you are seeing money go into the non-semiconductor. yesterday talking about these rare earth suppliers on the fact

they could be the next weapon in the u.s.-china trade dispute, in sydney, up by another 6%, now above the target price. a lot of analysts saying it is perhaps fording that bid on the back of a trade war. we know there are no winners, but this stock certainly benefiting. let's turn to brexit. bloomberg has learned theresa may is facing pressure to abandon her brexit deal and quit as british prime minister within the day. of's allies see little hope her divorce deal getting through the house. former chairman of the conservative party says he wishes she had proposed a vote on the second referendum earlier. we spoke with him exclusively. >> it is the most important thing she has done in months. a lot of fair-minded people should be prepared to give that a chance. what is to lose if you want to

referendum? how else are you going to get it? misses have doubts about mae's deal. your doubts will not be nearly in the partyhose within a party, the hardline exit here, the ones who seem to think we can do without any deal with the european union. they talk about doing business with europe and everybody else. they would not know if it bit them on the backside. there is no -- if you can do business on wto terms, why are they trying to negotiate trade deals with other countries outside the european union? suffer is onehey which would be, i hope,

improperly exposed in the referendum campaign. may the credit for proposing this, i just wish she had done it earlier. nejra: let's get more with anna edwards in london. also with us is chief economist at sea and why mellon. such a mae's offer get resounding backlash? anna: a couple things looked a bit new. one is the thing that moved the markets in expectation of her speech yesterday, offering a second referendum and offering -- or a vote on a second referendum and also offering a temporary customs union. nobody seems to be listening to theresa may right now. alienated thee brexit argument. within the u.k. political scene now around brexit. she has alienated many of them.

it goes to show how difficult it is to find any kind of compromise. people still entrenched and nobody is listening because there is not a hard deadline. that situation that seems to be holding out for their best option, their favorite option, rather than making tough decisions. even some of those mps who held their nose and backed her into third vote say they will not this time around. labor will not, dup will not, many --iteers desha many brexiteers will not either. manus: some might describe johnson as mendacious. how did we get here so quickly she can be toasty? anna: you have the odds checker on screen. boris very popular. johnson very popular. that list is narrowed down.

we seem to have really up to the pace in talking about how quickly she goes. she already said she wants to bring her boat back in early june. once that is done, she was going to be setting out the timetable for her departure. go as under pressure to lot sooner. this raises big questions. it does not look as if her deals going to get through. why bring it at all? and if you are not going to bring the deal, what is the point of theresa may hanging around to add extra complication, we have the european elections in the u.k. tomorrow. we will see how the brexit party does. if the conservative party does is badly in the polls, way behind the exit party, that will get many people angry and increase calls for her to leave. nejra: you have said before there are only three options. a deal, no deal, or remain. to these development's make no deal more likely?

>> it is really important to remember, actually, amidst the confusion there are only those three options. is reality of parliament no deal.in in enough fire power to rule out any kind of compromise. deal -- i think european elections are a key issue. it is pretty clear nigel farage's brexit party is going to do well. also any tory leadership theaign will have to take results of those elections. a be in the short-term no deal possibility goes up. morning to you. no deal in hard brexit, it is almost as if -- sterling looks a little bit higher on a contingent second referendum.

is not reacting the way one might think on the prospect of another referendum or less risk of hard brexit. >> that is may be slightly surprising. i think what is going on here is that the past six months or so, sterling has been volatile simply because we have seen quite frequent changes in probability of these three different outcomes. every time we shift toward or remain or sterling goes up, et actually, thera, political development of the past week or so have more or less been priced in by the market for quite some time. there has not been a huge amount of surprise, which is why sterling has remained stable where it is. instance, ise for expect a big move. manus: we have a lot more to get

through. anna edwards tracking the brexit story. thank you so much for getting up early. sticking with brexit, the bank of england deputy governor says leaving the european union could have the country returned to a more british style of regulation. what is that? assist in exit would responding to emerging threats. >> if i could offer two views that i have, one is i think we oft maintain high standards financial regulation in the u.k.. it is only 10 years ago we had the biggest bank in the world here in the u.k.. we cannot go back. question of the silo which we regulate after brexit. style in which we regulate after brexit. a more british style is still

tough but has less detail it is more dynamic. >> that is interesting. you talk about how the u.k. cannot be a rule taker and financial services. where specifically do you need a more british style of regulation? >> you look at the different ways we have brought in regimes. the best example, we have done in the u.k., not elsewhere in the eu, the way that was done is very different from things like other european directives. principles and important design features in legislation, and the benefit of that is we can be more dynamic and we can evolve it as the risk evolves in front of us. benefit of it be a brexit for the financial sector to get this other style of regulation? >> if and when we actually exit the eu, i do not see a compelling reason to continue

with the eu method of regulating, which naturally leads to -- manus: boris johnson must be salivating. that was the bank of england deputy governor, prudential regulation authority ceo. it is fascinating to talk about british regulation. they have led with regulation. what is british regulation? very patriotic. have often talked about how financial regulation for europe is written with the u.k. holding the pen because of the size of the financial services industry in the u.k.. interesting to talk about this british style. your remember at the time of the financial crisis, a lot of criticism of the u.k. style of regulation was light touch. out,oods is key to point pointing our minds back to the

collapse of the financial services sector in the u.k. at the height of the financial crisis. phrase that was often used to describe the british approach, light touch. he draws a distinction between that and the european approach. he sees it as a potential upside , something of interest from a financial services perspective. i spoke with the former european commission president yesterday and he said he was surprised financial services did not feature more strongly in the brexit conversation. know.ver maybe that is something to look to. manus: great work. nejra: anna edwards, great to have you with us. coming up on bloomberg, ecb president mario draghi speaks at an event to honor the chief economist whose term ends next week. we will bring you that interview at 8:30 a.m. u.k. time.

♪ manus: if you are traveling to work, tune into bloomberg radio live on your mobile device or dab digital radio in the london area. this is bloomberg. ♪

nejra: this is "bloomberg daybreak: europe." manus: let's check on the markets. we rating. -- re-rating.ng i just wish dollar yuan would get to seven. will be the chinese decision that breaks the seventh level on the onshore yuan. isrling is just -- it just not flickr. it popped higher on the prospect of a second referendum then it realized theresa may not be there to see anything. nejra: dollar strength for a second day ahead of the fed

minutes. we heard from james bullard saying a cut would be premature. year yields gain alongside equities. futures in shanghai on the back foot hitting a four-month low. a little bit of a different picture if you look at the lme copper. that is unchanged. let's get a bloomberg first word news update with debra mao. >> the potential next prime minister of the united kingdom has been denounced as incompetent and a liar. that is by chris patton, who says he would be a disaster for the tory party. the former cabinet minister and governor of hong kong used candid language. >> he has lied his way through life. he is a huckster. i think he would be a very bad choice indeed, but i suspect it

may well happen. >> angela merkel was reportedly approached about taking on one of the eu's chopped dobbs -- stock -- top jobs. some heads of state and government are holding out hope she may change her mind about the eu top job. robert mueller is bulking at testifying before congress. he has reportedly pushed for closed-door appearances. the special counsel does not want to be pulled into a political fight. he is hesitant to publicly discuss his final report. another option being discussed is that robert miller makes a public statement for the committee questions him in private. global news, 24 hours a day on air and @tictoc on twitter powered by more than 2700 journalists and analysts in more than 120 countries.

matt: the u.s. is considering curbs on as many as five chinese surveillance companies, potentially cutting them off from american components. these include high collision digital technology and do our technology. china's ambassador to the u.s. says it remains ready to continue trade talks. >> we are committed to whatever we agreed to do. that changes. side its offer. we are ready to balance -- to address the imbalance. we are ready to buy more american products and services. we are ready to do more in this regard. that is the ambassador. xi jinping has been making other comments. there is a wonderful op-ed this morning. huawei's story

personifies the global nature of how this is spreading. do you agree? >> i do, to an extent. what we are seeing is the broad trade war morphing to some degree into all about tech. the thing turned a member about the trade issue is in a way it is kind of shorthand. something much bigger and deeper , which is essentially the reset of the international political relationship between the u.s. and china, which is going to go on for the next 5, 10, 15, 20 years. puzzled,s are a bit because if you look at the impact of trade on things like the impact of tariffs, it is pretty small. even if tariffs go to 25% on all of bilateral trade, we are talking only really 1% of global trade. why is the stock market reacting

so dramatically? partly because it may be an overreaction, but also because the stock market realizes there is a bigger international political crisis. nejra: you actually think trade is too small to explain the global slowdown. to me, this is concerning. if trade, which is such a big issue we talk about it they after day, is too small to explain the slowdown, should we be more concerned about the slowdown then we are? >> let me just clarify that. bilateral trade between the u.s. and china which amounts to $700 billion, 25% of that is about 170 billion dollars, only 1% of $17 trillion global trade. most economists estimate the impact of a bilateral trade war ranges between 3% and 1%. which is significant, but not disastrous. we have seen a slowdown. that suggests that are

independent slowing's in china on the domestic demand side. the has more to do with the slowdown we have observed than the tariffs themselves. if there are independent slowdowns going down -- going on , it is more about a negative feedback loop. -- mydo i put mine capital? it is about confidence. that is very -- the very heart of markets. >> you are absolutely right. that is what is happening. of fairly the sort narrow numbers about trade. themore important point is one i made subsequently that trade is shorthand for something much bigger, which is the breakdown of the relationship,

if you like, the we have seen between the u.s. and china the past 20 years. the resetting of global international relationships. that is a really uncertain thing. markets hate uncertainty. trade is shorthand for that. i should say also the tech war is really the first step in that process. down: if china is slowing independently, how effective will stimulus be? >> effective, but not as effective of 2016. the magnitude of stimulus is smaller. also because china is trying to hit two targets with one instrument. there is the economy, but also financial stability conditions at the same time. is the mostuan important gauge worldwide at the moment. shamik dhar stays with us. james bullard says the fed might have slightly over done it by

raising interest rates in december. we will bring you our interview with of st. louis fed president next.

nejra: this is daybreak europe. up forlet's get you set your trading day ahead. 8:30 a.m. this morning, ecb president mario draghi speaks at an event on monetary policy and to honor then chief economist whose term ends may 31. commerzbank's annual general meeting is going to get frisky in frankfurt. he believed flirt with deutsche bank. a few ongoing issues. at 9:30 am we get the

latest reading of inflation for the u.k. across -- the u.k. economy, expected stronger than last month. watch for continued uncertainty around brexit. later, the fomc announces -- releases its minutes. traders have increased bets the central bank will increase rates. watch for dovish clues from fed policymakers. as we look ahead to commerzbank's agm, here are the views of some of our guests on the story for european banks. >> i think eventually we are going to see consolidation. business. any be ruled, it cannot out per se. italian company could compete at the international level. >> you are hoping in the foreseeable future.

conditions are set to see a real consolidation in europe. m&a is not some we find attractive. we really don't have any comments on any market rumors. it is really a question of sticking with our organic strategy. we look at transactions as they are presented. >> acquisition is more risky, more challenging. , we haveay no shareholders. manus: joining us around the globe we have our partner in mumbai. good to see you. results from the indian election announced tomorrow. investors still bidding up the market on the back of what they see as a certainty. trade tensions on the others.

-- on the other side of. todayumes have been muted . we see benchmark indices advanced by a little over a quarter of a percent. what has changed is investors have started pouring in funds. we have seen about a quarter of a billion dollars come through. of thewe see the return national democratic alliance, there is a chance we could see more funds come through. for now, a quiet day of trade. not much to speak for for the banking index either. it hasn't fenced that should has advanced around half a percent. the volatility index is what we will keep an eye on. it is advancing despite the fact markets have been stable. that should be on the rise as we move into the big event of the outcome of the general election tomorrow. thank you very much.

the dollar has advanced for a second day ahead of the release of the minutes. they are coming as well. it is the latest from the fed policy meeting. meanwhile, the st. louis fed president says policymakers may have put slightly over done it. it is toooomberg early to talk about a rate cut. for this to affect fed policy, these terms would have to stay on for quite a while. something like six months. at the end of six months if there was still no prospect of a resolution, i think that is the point at which it would start to weigh on fed policy. at this point, we are just talking. we are too early in the process. >> tell me about where rates are. >> rates are in a good place in the u.s. right now. if anything, we are little bit restrictive.

-- weoncerned that we are may have slightly over it with our december rate hike. i was pleased the committee visited. the current projections are for the policy rate to remain flat throughout 2019. we have very low inflation numbers. and low inflation expectations. that is a little bit concerning. i think that could be used to justify a rate cut at some point. >> absolutely. markets factoring in some, one or even two. >> we have two years of upside surprise that growth turned out to be better than we thought, on a play in lower, everything coming up roses on the real side of the economy, and yet inflation is really not at our 2% target based on our preferred measure, which is this core pce

inflation year-over-year, only 1.6 right now. it gives me pause that that is so low and it does give me more pause that inflation expectations are below our target. at are into those centered our 2% target? i think we can take this opportunity to try to re-center inflation expectations at the 2% target and gain credibility. >> you use the word persistently recently. is the definition of persistent one-month? four months? a year? toat a minimum we would like see what the second quarter of this year brings as far as inflation news. we will not have that information until you get to the august, september timeframe. it could be that it is just noise. it is possible. this thing might bounceback, but

if it does not and it looks like we are going to miss our inflation target again in 2019, that is what gets very concerning. ,> we have reached where we are a quarter-point cut out of the fed. how much difference would it make? cut ahink if we quarter-point in an environment where the u.s. economy is to the upside again in 2019, that would send the signal we are serious about hitting the 2% inflation target. we are serious about, we want the average inflation rate over time to come out to 2% on our preferred measure and we are willing to tolerate somewhat higher inflation for some period of time to get the average to 2%. i do think it would be important to markets if we get to that point. i think it is premature at this point. this is something that could be

done, possibly. that was james bullard, st. louis fed president, speaking to bloomberg. shamik dhar is still with us. like james bullard talking about a rate cut being premature, take notice. the markets are looking for the fed to cut. economists generally think the fed should stay on hold. j.p. morgan does a weekly survey of sentiment and that shows bond traders are the most bullish since 2016. that was just before yields started rising. will history repeat? i want to ask you, if the bond market is wrong on growth like a lot of economists say, is it correct on inflation? >> there is quite a bit to unpack. long time dove, i share his view the u.s. economy remains mired in the post financial crisis regime. inflation expectations are

anchored at too low a level of between 1.5 and zero. in some sense it is incumbent on the fed to do that. he was a minority on the fed, but minutes will show a tendency toward his view. if history repeats itself in the bond market -- nejra: is it right on inflation? >> broadly speaking, it is. issue,on is not an basically, as far as the bond market is concerned. that is what bullard is saying. that is what quite a few economists are saying as well. the one thing we might be slightly concerned about is that it seems to be backing that up with a relatively low growth forecast for this year. the big surprise could come from u.s., it seems, where they are in a strong financial position,

unemployment rates are low, we could see an upside to growth. it would implynk higher inflation, but the bond market might. manus: the markets are racing ahead with regards to 25 basis point cut. that is moot. it might be about the signaling. wells fargo have written a cracking piece and they say expect the size of the balance sheet to double. they are going to go for yield targeting. but might not call it qe, you are going to need a new derivative against the slowdown you have identified, which happened before trade war angst began to peek. do you think we will see an expansion of the balance sheet again? it is possible. that piece sounds like it is suggesting the u.s. economy is about to become japan if i'd -- japanified.

toy have moved from qe targeting the long end of the curve. the u.s. is still away from that. on the one hand, it is true to is the u.s. gdp per capita still 7% or 8% below where it ought to be based on precut -- precrisis trends. it has been the best performing economy globally for the past five years. major economy, at least. i do not think we are at that japan situation yet. i would say the fed are always creative thinkers. one thing to watch out for is beginning in june, they are going to start looking at the terms of their mandate quite seriously. there have been quite a lot of significant and serious research into what they should be doing. june might be the turning point. not just what they do for the balance sheet, but also, frankly, what they target. nejra: are there upside surprises we could see the

second half of this year or later that will put a rate hike back and play? we keep talking about a cut, what about a hike? shamik: that is not my central view, but if there is an upside surprise, that is where it is going to come from. households have done their reduction, wage growth is still reasonably strong, real income growth is strong, and of course inflation is low. all that adds up to quite a healthy position for now. extent is the dollar a challenge to the growth story in the united states of america? we are nearly at a two-year high on the dollar index. munition and ross job owned the dollar in davos 2018. jawboning.minent i respect your position. from a pure economist point of

view, are there headwinds? shamik: economists would agree jawboning can be powerful, proving more powerful than some systems. i think it has been a significant headwind. to return to the u.s.-china relationship, it has been one in which if you like, the potentially negative impact of tariffs on both sides has been offset slightly on the chinese one by depreciation of the -- of the yuan. moreusly the u.s. is a internally focused economy than most. the effect of the exchange rate is smaller than most countries. it is nevertheless still there. thank you so much for being with us this morning. that is the chief economist at bny mellon. let's get your first word news.

>> theresa may is facing pressure to abandon her brexit deal and resign. senior officials see little chance of her divorce deal being passed in parliament, even after her promise to give mp's a chance to call a second referendum on brexit. the potential next prime minister of the united kingdom has been denounced as incompetent and a liar by former conservative party chairman chris patton, who says he would be a disaster for the tory party. candid language to describe johnson's qualifications and his track record as foreign minister. has lied his way through life, through politics. he is a huckster with a degree of charm to which i am immune. i think it would be a very bad

choice indeed, but i suspect it wave -- it may well happen. >> president trump is considering a blacklisting chinese surveillance giants. faced accusations they are part of the government's persecution of a muslim ethnic group in the country. restrictions will be similar to those imposed on huawei. robert mueller is bulking at publicly testifying for congress. he has pushed for a closed-door appearance. the special counsel does not want to be pulled into a political fight. another option reportedly being discussed is that mueller makes a public statement before the committee questions him in private. global news, 24 hours a day on air and @tictoc on twitter powered by more than 2700 journalists and analysts in more than 120 countries.

this is bloomberg. it is the last day before voting begins in the european parliamentary election. the you can't netherlands prepared to vote tomorrow as theresa may faces pressure to abandon her brexit deal and quit as prime minister. let's go to maria tadeo in brussels. great to see you. you can't netherlands prepared to vote tomorrow. what can we expect? >> good morning. the timing of the election for the united kingdom, very strange. the prime minister still says she cannot deliver brexit. the reality is three years after the referendum result, britain will vote in a european election . this is an election that is very closely watched in brussels. they want to see whether nigel farage does well and what the brexit party does.

the concern for many, really just look at the election as an assessment of whether we see that surge in nationalists to block legislation at a time where the european union really needs reform across so many areas. what does brussels think about theresa may's new offer? dead woman walking or opportunity? >> they do think it is very unlikely the deal will go through given the reaction we had out of the u.k.. the official line is still very much that this is a done deal. the extension to that brexit deadline does not mean renegotiation. we coulda real concern see prime minister may go. that brings a big? -- a big question mark to what happens and will the new prime minister feels she needs to

stick with the deal and what happens to the october deadline. >> the difference between who they might vote in and what the berdych parliament might be prepared to pass. maria tadeo with the latest on the european elections. coming up, jay powell this week will hit back over critics who argue the fed is asleep at the wheel over corporate debt. that conversation next. this is bloomberg. ♪

nejra: this is bloomberg daybreak: europe." now to the credit markets. jay powell this week addressed critics who argue the fed is asleep at the wheel. this has concern rises over the

poses of leverage lending to the financial system. powell agreed it looks a lot like the mortgage industry in the run-up to the subprime crisis. .egulators are watching closer the financial system is in better shape. he pointed to mutual funds. investors have been whipped into a frenzy over eagerness for yield. cio of arena investors, a neat -- a new york-based firm. great to have you with us. is jaystion, simply put, it is not a crash threat. would you agree with that as a starting point to our conversation this morning? >> no.

crisis,saw during the mortgages were obviously ahead of themselves. so were a variety of others within the yield universe. similarly, leverage funds are away beyond where they need to be from a credit perspective. there are several other areas where things have become overheated. where the fire starts, you never know. nejra: you are a chaser of liquidity. you are also unconstrained. around concerned leverage lending. where do you see the opportunity as we potentially slow down and head towards a recession? chase liquidity and ultimately we want to go where they aim, so to speak. we want to set ourselves up in a tradable market by creating capital structure transactions where we can effectively pay

very small amounts of money. we look at that as a way to hedge. on the long side, within our things thatus on have not been affected by the run-up in the chase for yield. frequently, that is things like private lending that avoids middle-market funding. classeshat makes asset across property, structure, finance, and real estate. up to that set us purchase service assets where there is a small but very appealing amount of stuff to do today. we would call those eighth or ninth inning opportunities preparing for the first or second. distressed consumer loans, auto loans, things where we are starting to see cracks.

the difference between a good environment and bad is not the quality we are looking at, but the amount we can go after. where are the biggest cracks? the securitization market is a place where yield hunger has shown itself tremendously. relatively speaking, we are seeing deterioration in credit quality across corporate mortgages. it is really across the board. seen in corporate loans as an example, today's triple b was yesterday double be. b.yesterday's double structural leverage created by securitization. you are seeing cracks within credit card receivables. you are seeing that in subprime auto. you are seeing the beginnings of

what could be a real problem in commercial real estate and certain aspects of commercial real estate. high-end residential as well as the overheating in the corporate loan sector. priestly -- you are obviously in europe looking for opportunity. >> i am a believer there is a japanization of europe happening. we are very focused on greece and italy. we think there is a 10 plus year opportunity to really get at the issues in the banking system. in a lot of instances because of the suppression of rates, things have been in a position not to have to do the right thing in terms of rationalizing their balance sheet. we are also seeing opportunities to kind of -- nejra: great to have you with us. thank you so much. korean authorities meet to discuss distortion in one

trading.- won james bullard saying the fed may have overdone it, but a cut is premature. ♪

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nejra: good morning from bloomberg european headquarters in london, i am nejra cehic. manus: i am manus cranny live from dubai. this is "bloomberg daybreak: europe." ministermy -- prime rolls the dice on a brexit gamble but is facing increasing pressure to abandon it all and quit. further action. the offshore yuan raises gains as the trump administration considers blacklisting up to chinese -- five chinese surveillance groups further fueling trade tensions. in a good place. st. louis fed president and fomc

voter james bullock tells bloomberg exclusively it is premature to talk about a rate cut. ,> i am concerned that we are we may have slightly overdone it with our december rate hike. ♪ nejra: good morning, welcome to the break europe. it has gone 7:00 a.m. in europe. a headline new see on the korean won trade a bank of korea official says the one is falling to rapidly. we have seen the one trading fairly steady but they are talking about the broader context here. korean authorities we learned earlier as well are to meet to discuss the distortion in the one trading. that is an update on the fx markets and the korean won.

how are the bond markets looking? manus: they are not letting anyone interfere, they will buy back in those fx markets. bond markets, if you have a look at it, jpmorgan bond survey, treasuries this morning are up a couple of pips. net longs are running well above average. the bond market is the most bullish this 2016. is hasue for the market these yields gone too far and can you justify such low yields when we are not facing down the neck of a recession? that is the sentiment in the bond market. we might have [indiscernible] with the rate hike but no need for cut. bonds,ey is going into the equity market is dealing with a new level of risk and angst between the u.s. and china in regards to those software companies, the video software companies in terms of potentially being cut off from more technology from the u.s. a little bit of marks &

spencer's, i do miss it area -- miss it. nejra: let me bring you the numbers. marks & spencer's full-year food comparable sales down 2.2%. the estimate was a drop of 2.4%. it are than expected. the full-year clothing and home comparable sales down 1.6%, worse than the estimate of a drop of 1.4%. the full-year adjusted pretax comes in at 523 point 2 million pounds. the estimate was 519. we have a beat on the full-year adjusted pretax. taking a look through the other headlines, the final dividend per share is 11.9 pence. the marks & spencer group, issuing an announcement and that is a red headline. marks & spencer writes an issue of circa 601.3 pounds for the joint venture. that is the red headline that we are paying attention to coming through on the bloomberg.

has beensted pretax held back by operating challenges. some of the details coming through. let me get to the broader equity futures. we are under an hour from the start of cash equity trading. you mentioned the new headlines on trade which is the u.s. weighing blacklisting of two five chinese firms and u.s. futures were flat. we are turning negative on nasdaq futures down almost .3 of 1%. european futures steady, dax of 1%. off by .1 ftse 100 futures in positive territory up .2 of 1%. theaps it has to do with pound or sterling weakness area may was going to offer parliament a vote on the second referendum but the gains were given a. you have more headlines. manus: just a quick headline, another ipo from train line. they are intent on issuing in the london market, last week we

-- phenomenal are [indiscernible] it has not had a great opening. a tough time to bring your ipos. let's get to the rest of the markets around the world. juliette saly standing by and singapore. go on the one area they are not going to have anybody move their market aggressively, are they? juliette: there was an interesting line coming through from the bank of kerry up. also we have korean stocks higher up i .3 of 1%. have a look at what is happening in the csi 300. the reports that the u.s. could blacklist up to five chinese surveillance firms. it was listed in the new york times report, it's plunge substantially in the chinese session and the csi 300, slight gains now down by .501%. it has been mixed to flat. we are awaiting the fed minutes.

you have india's market higher ahead of the announcement of the polls there. australia at an 11 year high and the nikkei closing up pretty flat in japan unchanged on the nikkei. let's have a look at these currencies. the latest lines on the trade off shoring -- erasing some of those gains now down .1 of 1%. and more analysts towards -- start to say we could see the seven line reached once again. we have the korean won and there, pretty unchanged. the bank of korea coming through saying it has fallen through to rapidly. it is asia's worst-performing currency. trading at a two-year low also the growthecd cut outlook and authorities meet to discuss this distortion in one trading -- won. won trading. we are seeing protests in

jakarta following the election. we are hearing from jakarta that six people have died, 200 injured in the latest protests today. manus: thank you for the roundup. our correspondent in singapore on the markets. let's talk fed and policy. this was parte, of the panoply of what we look at from the latest meeting could reveal of the option of a rate cut was discussed create something that jay powell has cautioned against. the st. louis fed president james bullard said policymakers may have "slightly overdone it" by raising interest rates in december. he told bloomberg in an exclusive interview, it is too early to talk about a rate cut. james: rates are in a good place in the u.s. right now. if anything, we are a little bit restrictive, i would say, and i that we i am concerned may have slightly overdone it with our december rate hike. i was pleased that the committee

pivoted. manus: interesting admission. joining us from [indiscernible] listening to james bullard, we slightly over did it but it is to tie up -- too soon to talk about a cut. how do you interpret those statements? that clearlyink supports our view that the fed is on a wait and see mode for now until they can better evaluate. especially the fallout of the trade war and whether inflation is a temporary observation or whether it will continue to fall. bring yournt to attention to some headlines we had in the past two minutes around the korean won, great to speak to you this morning. a bank of korea official is saying the won has fallen to

rapidly. it is asia's worst in 2019 and it is topping the most oversold level in five years. if you look at the relative strength index which shows momentum. would you want to take the other side of that trade and why the korean won at the moment? i would not. we've seen throughout asia that currencies are under tremendous pressure. due to the trade conflict. the technology is important for korea and due to the renewed escalation of the trade conflict with the u.s. and china, there economyrn that the real in the region will suffer. if we do not see a trade deal between the us and china soon. it would be too optimistic to go to the other side. manus: this has all the hallmarks of a more combative

style from central banks. the. one may have had a burial and move and there may be merit and then investigating. are we going to see more activist central bank intervention? indicated thatas they are going to take stabilizing measures if they think that the move of the fx market are overdone. it is -- could be that we do see that. due to these growth concerns, the asian central banks are inclined to turn to more supportive measures. currency stability is very important for them. so they might get more interventionist to find a middle way between supporting the economy but also guaranteeing fx stability. nejra: as we're talking about trade and you said you would not necessarily want to take the other side of the korean won trade and why the korean won or

the other asian currencies, based on your outlook for u.s. china talks, there are interesting conversations what to do out there. citigroup is predicting the aussie and will slip in a few weeks. trading on a 75 handled. -- handle right now. all of -- what are your preferred crossers to trading the trade -- trade wars? esther: the interesting thing is they are both safe havens. the aussie and is a different trade. the aussie is risk currency. and euroyen you protect yourself a little bit against the possibility that we are going to see an agreement. now toifficult right manage fx markets. there is tremendous uncertainty. we're going to see things develop one way or another.

we are seeing most likely severe further escalation. or are we going to see a time of trade piece? the focus is on the g20 meeting at the end of june where we expect meeting between trump and xi. most markets would rather try to stay out of risk. of try to survive this time tremendous uncertainty without getting too much on trends on one side or another. we have more to discuss. mario draghi speaks at an event in honor of chief economist whose term ends next week. manus: if you're traveling to work, blue -- tune in to bloomberg radio. we are live on your mobile device, dab digital in the

london area. this is bloomberg. ♪

manus: and has gone 7:15 a.m. in london. bang on the money before your cash trading starts. i am manus cranny in dubai for daybreak europe. nejra: i am nejra cehic in london. u.s. futures are taking a negative firm after trading flat for much of the asian session. , gain onuro stoxx 50 some optimism. that has taken a turn for the worst with the news that the u.s. is blacklisting some chinese firms. we saw that it jumped on the prospect of a vote in parliament but gave up the gains. go forwhere do you

protection crystal rock you have oil and markets slipping. the oecd says we are in a low growth track for the world and copper, keep an eye, you have a la me copper dropping and trade tensions are the most anxious issue. new headlines, five chinese companies may face a tough time getting access to u.s. technology. that is a new level in the trade war asked. with get your business flash. debra mao is with the team in hong kong. job of bmw's chief executive is reportedly hanging in the balance. this has the luxury carmaker steers toward a future of electric and autonomous vehicles. we have learned some on the supervisory board are questioning whether he is the right choice to lead the company. 12 employees in

its equities division in new york. the dismissals were across the firm's research unit and the electronic trading divisions. the lender is speaking -- seeking to reverse a plunge in equities trading revenue in the first quarter. street haveoss wall faced similar pressure in recent months. settling a tax evasion case with italy for 100 million euros. the agreement may come in the next few weeks. the swiss bank says it faces claims from tax authorities regarding its authorities over five years starting in 2012. three months after ubs was ordered to pay more than 5 billion euros for helping french clients launder their assets. that is your bloomberg is this flash. thank you. not to international relations and bloomberg has spoken with the former governor of hong kong on a range of topics from brexit to the ongoing trade conflict.

we started by gas asking about the proposed extradition law. extradition -- what the extradition law does is to destroy the firewall between rule of long -- rule of law in hong kong and what the chinese diplomatically called rule by law in china. and that means there is no real distinction between the courts, the security services, and what the party wants to happen. it is not surprising that this has caused as much alarm as it has in hong kong. i think it is the worst thing that has happened as far as the communists in beijing are concerned and hong kong. what it raises is a fundamental issue for all of us. people talk about china's role in the 21st century that the chinese have yet to prove that we can trust them and if they

break their word over hong kong, where we going to trust them? >> huawei when it comes to the u.k., to do you think they can be trusted to be a key player in british five g? >> i don't know where -- whether huawei can be. if the issue comes to whether you can trust china, the answer is no, you can. i hope and people are prepared to separate huawei in -- and while ways interests in china. whether you can are not given the rather murky issues of the ownership of huawei is going to be important and challenging which we are going to have to discuss in the next weeks and months. i am not knowledgeable to comment to -- on the relationship of five g technology in the fringes. what i can't comment on is a simple fact that china cannot be trusted. >> if i asked you and -- in your primety, we had the

minister a short-term ago, out and say that she is willing to give a free vote on the second referendum on brexit as part of an effort to get her deal through parliament in a vote next month. does that make sense to you? >> it is the most important thing she has done for months. and i think that a lot of fair-minded evil should be prepared to give that a chance. -- people should be prepared to give that a chance. what is to lose if you want a referendum, how lc going to get it? mrs.ay have doubts about mays deal. not be -- doubts will nearly as great as people like the party within a party in the conservative party, the hardline brexiteers, the one who seem to think that we can do without any deal with the european union. they talk about doing business onh europe and anybody else wto terms. they would not know that meant

david at them on the backside. they have no idea what that means. to anotherint country that sibley does business on wto terms. if you can do business, why are they trying to negotiate trade deals with other countries outside the european union? the dilution under which they think is one which i would be exposed in the referendum campaign. i give them credit for proposing this. i wish she had done it a bit earlier. now is ouring us international editor. great to have you with us. there has been a resounding backlash for theresa may's proposal. is this the end of the road for deal? >> and she said she would never into anotheres

election. this is her last gambit. after her proposal the backlash came and it was swift from the tories and her party and labor outside her party. what we are hearing is senior officials in the tory party said to her, you need to kill your plan to have another vote on this deal next month. the deal -- you need to step aside and make way for another leader to have a go to get exit through. -- to get brexit through. manus: he is out in front as the potential next prime minister. so would he have any better luck in getting a potentially reform repackaged brexit deal through our lament? there is no appetite for a no deal brexit. >> not necessarily. you might find that a new leader gets momentum, can we at least find a way through? the fundamental questions around brexit remain. parliament is divided around

that and if you get a prime minister in the form of doris johnson who is a hard brexiteer, how do you bring the rest of parliament and the signatories -- and the doubters along with you? if you are to the hardened brexit, you could make it impossible to get a deal through. nejra: great to have you with us. and looking at cable now, we dropped below 27 -- 127. we are stable given the development we have seen over the past 24 hours. where's the next move in cable for you? esther: i think, i am quite sure we are going to see a further pound weakness. the market is -- has learned a solution is not going to be easy does not proposal guarantee any success. that is why we did not see that much of a movement in the end

yesterday. i think the market is still uncertain about how much uncertainty we are going to see. it is waiting for the vote that what comes after that, that is unclear. i do not see a big chance for this deal going through. afterwards, most likely the prime minister that is most likely trying to get a harder brexit. that will require a weaker part. isus: that weaker pound manifest in the eurosterling trade. that is where the most vicious movements have been. the brexit party is 30% -- 37% on a pole. is nigel farage is party succeeds so aggressively, well that make the risk much higher to hold a long brexit position? a long sterling position? that is 40 and for you.

esther: it will give more supporters of a hard brexit and a leadership challenge in the tory party. -- a possiblehat brexit that is not a hard brexit and as long as that is the case, i would stay away from betting on a stronger pound. mattis: it is looking a little frisky this morning. sterling is a little bit lower. the headline you broke at the top of the show is the equity focus, the rights issue from marks & spencer's and that review on the korean won. what was that you gave, the lowest in two years? nejra: the most oversold in five years and it is the worst in 2019.

there is your stand on the korean won. we talked about the pound. future -- ftse futures are higher. that is a focus as we close. the european equity market up next. this is bloomberg. ♪

manus: welcome to bloomberg markets, the european open. we are live in the city of london. anna: i am anna edwards alongside matt miller in berlin. matt: market say let's wait and see. risk assets hold steady at -- today's fomc minutes. even as tensions rise, ftse contracts are the only bright spot in european futures ahead of the cash trade less than 30 minutes away. anna: